Fannie Mae-No Politics (FNMA)

[kthomp19]

to me to exercise a warrant - based on my reading - is to pay to issuer of equity the required amount and to get shares in return

that is the exercise

there is no requirement to exercise and SELL the same time

Right. If Treasury were to exercise the warrants right now they would receive 7.2B shares. They would be under no obligation to sell those shares at any point and certainly would not have to sell those shares immediately. Ostensibly they would wait for an advantageous time to do so rather than dumping them all into the market at once, but seeing how Treasury didn't try to squeeze every penny out of its other 2008-era warrants I don't see them necessarily doing so with FnF's.

FnF would be forced to put the $72,000 (the amount Treasury would pay for the 7.2B shares) towards paying down the seniors, but that's just a rounding error here.